Industry Insight
On the pulse SME optimism dips as inflation and cost rises bite Anton Nebbe Head of PR and Communications Close Brothers Asset Finance
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very quarter Close Brothers Asset Finance surveys around 1,000 of the UK’s SMEs, many of which use broker services to access financial support and advice. Collating their views in the Business Sentiment Index (BSI) is an important way for us to keep our finger on the pulse of business owner confidence at a given moment in time. It also helps our business finance teams and our broker partners gain valuable insights into the thoughts and opinions of SMEs. The index tracks business at a macro (UK) and a ‘key’ sector level, namely: • • • •
Transport and haulage Construction Manufacturing and engineering Services
Working with a statistician, the score we use is calculated using four key metrics that chart respondents’: appetite for investment in their business in the coming 12 months; access to finance and whether they’ve missed a business opportunity through lack of available finance; views about the UK’s economic outlook; and thoughts on their likely business performance in the coming 12 months. 40 | NACFB
Latest results The latest results found that business confidence reached record levels in late 2021 across all sectors, except construction, but has since fallen back. The downturn in sentiment is by no means as severe as it was after the first lockdown was announced, but it is clear the rise in both inflation and the consequent uplift in the costs of doing business, including fuel and energy, are having an impact. According to our figures, the other primary growth inhibitors were supply, driver, skills, and material shortages alongside the influence of Brexit. With many respondents facing an uplift in the cost of living – 78% admit to this being the case – it is not surprising costs are being passed onto their customers. Four in 10 respondents have chosen to pass the full cost increases onto customers while a further 24% have done so ‘partially’; 36% have chosen instead to absorb the cost increases.
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Despite the fall, figures are still very positive, notably in engineering and manufacturing where there is clear ambition
